June 4, 2018 / 2:04 PM / 5 months ago

PRECIOUS-Gold flat as dollar wilts, but U.S. rate view curbs gains

    * Gold holds in range after falling 0.6 pct last week
    * Money manager net platinum short hits record levels -ING
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates prices, headline; adds comment, second byline, NEW
YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, June 4 (Reuters) - Gold prices were barely
changed on Monday, supported by a wilting dollar as Italian
political risk receded, though the prospect of another rise in
U.S. interest rates capped gains.
    Spot gold        was flat at $1,292.90 per ounce by 1:34
p.m. EDT (1734 GMT), while U.S. gold futures         for August
delivery settled down $2, or 0.2 percent, at $1,297.30.
    "The dollar is the No. 1 factor for gold," said Marisa
Hernandez, senior equity analyst in global metals and mining for
Neuberger Berman.
    "In the near-term, while we still have interest rates going
up in the U.S. and not necessarily in Europe, the gold price can
be range-bound, but if the dollar starts to weaken again then
that is a key tailwind for the gold price."
    The metal fell on Friday after stronger-than-expected U.S.
payrolls data shored up expectations that the U.S. Federal
Reserve would press ahead with another rate hike at its June
meeting.
    Gold is highly sensitive to rising interest rates, which
lift the opportunity cost of holding non-yielding bullion. They
also boost the dollar, in which the metal is priced.  
    The euro eroded some of last month's hefty losses to bounce
0.5 percent against the dollar as Italy's political tensions
eased.        
    Equities also strengthened as worries over a potential trade
war between the United States and other major economies were
overshadowed by a retreat in political risk in Europe and strong
U.S. jobs data.            
    Finance leaders of the closest U.S. allies vented anger over
the Trump administration's metal import tariffs. Gold has
struggled to capitalize on the trade stand-off, however, as 
attention turned to the outlook for U.S. interest rates.
            
    Speculators raised their net long position in COMEX gold
contracts to the strongest level since late April in the week to
May 29, the U.S. Commodity Futures Trading Commission said.
       .
     However, gold-backed exchange-traded funds registered
outflows later in the week, suffering the biggest one-day
outflow in nearly four months, suggesting that investment
appetite was softening. 
    Meanwhile, silver        increased 0.1 percent to $16.37 an
ounce, while platinum        was trading down 0.2 percent at
$897.25 after earlier hitting a 10-day low of $894.55.
    Palladium        lost 0.5 percent to $994.47 per ounce,
after earlier seeing $1,010.50, a three-week high.
    Money manager short positions, or bets on falling prices, on
CME platinum contracts hit record highs in the week to last
Tuesday, ING said in a note. 
    "Open interest continued to rise as prices fell last week, 
suggesting the shorting continues, but at these levels we would
soon expect some support from short-covering/profit-taking," it
said. 

    
 (Additional reporting by Karen Rodrigues in Bengaluru
Editing by Susan Fenton and Andrea Ricci)
  
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